Eye-Care Sector Takes Hit on Bausch & Lomb Profit Warning
The stock of Bausch & Lomb Inc. plummeted 36% on Thursday after the eye-care company warned that earnings and revenue would miss forecasts for the rest of the year.
Bausch & Lomb also said it fired Carl Sassano, president and chief operating officer and a 25-year veteran of the company, and abolished those two executive positions.
Chairman and Chief Executive William Carpenter said the earnings shortfall drove him to “remove a layer of management, bringing me in even closer touch with the day-to-day activities of the business.”
The company blamed the expected weakness on lower-than-anticipated demand for contact lens-care items, problems meeting demand for surgical intraocular lenses, competition in the market for hearing products and the weakened value of the euro.
Bausch & Lomb said it now expects earnings of $2.69 to $2.74 a share for the year, including an acquisition last month, well below the $3.15 average forecast by analysts, according to First Call/Thomson Financial.
Revenue for the full year is likely to be flat or down from the previous year, excluding the acquisition, but up by 2% to 4% with the acquisition, Bausch & Lomb said.
“To say that I find these results unacceptable would be a gross understatement,” Carpenter said in a conference call. “We can and we will improve our 2001 results over these projections.”
Carpenter said his goal is to generate 15% earnings growth over the next few years and will release a performance update no later than the date the third-quarter results are posted. He added that the company is undertaking a complete review of how it is structured and managed.
The warning sent the company’s stock reeling, down $19.88, to close at $35.88 on the New York Stock Exchange, and sliced off more than $1 billion in market value.
The whole eye-care sector took a hit on the news. Contact lens maker Cooper Cos. fell $3.50 to close at $29.25 on the NYSE, even as the company said it expects third-quarter results to be in line with analysts’ expectations. Allergan Inc. slipped $3.81 to close at $66.50, also on the Big Board.
“This is a blindside. This is [like] walking across the street and getting hit by a Mack truck,” said analyst Lawrence Keusch of Goldman Sachs. “Four weeks ago, the company was suggesting that these issues were temporary in nature. We’ve certainly known there has been weakness in lens-care solutions and the pharma business, but the magnitude of the declines in earnings expectations is troubling.”
Investor confidence in the eye-care company has diminished sharply since July, when Bausch & Lomb posted disappointing second-quarter results. The stock fell more than 45% from a 52-week high of $80.88 to close Wednesday at $55.75.
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Eye Opener
Bausch & Lomb shares took a huge dive after the company shocked Wall Street with a warning of weak earnings
for the rest of the year.
Monthly closes and latest
Thursday: $35.88, down $19.88
Source: Bloomberg News
